Improving the Airport Customer Experience (2016)

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82.1 Historical Overview To understand customer service management at airports today, it is helpful to look at how it has evolved over time. The past several decades have seen considerable change, including disruption in the world’s economy as well as sudden and evolutionary changes in both the airline industry and the airport industry. 2.1.1 Airline Deregulation—1978 Airline deregulation allowed free entry into airports and routes formerly subject to regula- tion, resulting in explosive growth in air service and price competition among carriers, which had been unknown under regulation. Formerly, airlines applied for the right to operate in a route, and the Civil Aeronautics Board (CAB) considered the level of competition on the route, the service network of the airline, fares, and the cost structure and then determined whether the public interest would be served by allowing the new service. The regulated model offered little incentive for airlines to control costs and airfares. The CAB approved changes in airfares based on costs to operate over a given route. Airline unions were able to negotiate favorable wage rates and work rules for their members, with the airlines knowing that these cost increases, which eventually would be adopted by carriers nationwide, would eventually be passed on in the form of higher fares. Under regulation, air travel was expensive, particularly for leisure travelers. Most con- sumers were unable to afford air travel, or it was a luxury reserved for special occasions or emergency needs. After deregulation, intense airfare competition allowed millions of passengers to enjoy air travel, many for the first time. Although constrained by lack of aircraft and airport capac- ity in the early years following deregulation in 1978, airlines soon expanded, as shown in Figure 2-1. Airports had to respond to new entrant carriers and exploding demand for new air service by expanding terminals and adding concourses, parking facilities, roadways, and airfields. The effect on terminals was significant. Airport master plans developed in the 1960s and 1970s were soon obsolete. Terminals needed to expand—quickly. Long-term leases signed with certain airlines were constraints on rapid expansion as incumbent airlines were not necessarily supportive of expansion that would allow for increased competition. Agreements that allowed for certain airlines to develop unit terminals also became constraints in light of traffic growth and new entrant carriers. C H A P T E R 2 Evolution of Approaches to Customer Service at Airports

Evolution of Approaches to Customer Service at Airports 9 2.1.2 Open Skies As deregulation was reshaping domestic aviation, the U.S. government began pursuing a policy called “open skies” that replaced many bilateral aviation agreements that restricted landing rights with more liberal agreements that allowed service beyond traditional international gateways. In the 1990s, the United States signed open skies agreements with many European countries that gave U.S. airlines more destinations in Europe and gave European carriers access to cities across the United States. This international form of deregulation created new routes to more cities and removed regula- tors’ control over international airfares, stimulating demand for outbound and inbound interna- tional travel. Instead of one or two carriers (traditionally Pan American or TWA) acting as de facto U.S. flag carriers, other major domestic carriers were authorized to serve international routes. Deregulation, coupled with open skies, led to the bankruptcies and absorption of Pan American and TWA into other airlines but also resulted in more efficient domestic to international route systems as the major airlines looked to plug international destinations into their hub-and-spoke systems. The result of these major trends changed the airline and passenger mix at airports across the United States. Cities and airports gained new air service and saw traffic double in the space of just 20 years. Figure 2-1 shows the growth in annual passengers since 1970. 2.1.3 Hub-and-Spoke Development Deregulation also brought about the development and refinement of the hub-and-spoke system, where passengers arrive on flights from throughout an airline’s route network to the Figure 2-1. Growth of annual U.S. airline passengers, 1970–2014.

10 Improving the Airport Customer Experience airline’s hub airport and then board other flights to continue to their destinations. Hub-and- spoke systems can be highly efficient and offer real economies of scale. As these systems devel- oped, hub airports such as those in Atlanta, Chicago, Denver, Phoenix, and Dallas/Fort Worth all rapidly expanded to accommodate the demand as the hub carriers raced to gain market share. During this period, the emphasis was on building airline-efficient facilities to accommodate large numbers of passengers; the passengers’ airport experience was a secondary concern. 2.1.4 Low-Cost Carriers In the early 1990s, the advent of low-cost carriers providing point-to-point service challenged the dominance of the hub or legacy carriers. Low-cost carriers added further price competition and opened up new cities at lower fares, resulting in rapid growth of passengers. The “Southwest Effect,” where Southwest Airlines would enter a market with low fares that would be matched by the incumbent carriers, created sudden growth and, in some cases, a shift of passengers from major hubs to secondary airports. 2.1.5 Competition Between Airports Some airports, often secondary airports in large markets, chose to compete on price, offering low-cost carriers access to their airports and the larger market at low costs. This strategy was not necessarily a guarantee of success; larger airports with unused capacity could handle additional air service at a low marginal cost (provided that their airline rate-making methodology was flexible). This also led to increased competition among airports. Chicago Midway Airport, virtually dormant after once serving as the world’s busiest airport, saw a second life as a hub for Southwest Airlines. Smaller secondary airports became busier, changing the dynamics in markets such as San Francisco, which saw increased competition from Oakland and San Jose airports, or New York, where Newark airport became a base of operations for a new low-fare airline, PeoplExpress. In 1992, Pittsburgh International Airport opened its groundbreaking AirMall initiative for its new terminal in order to make the new airport more attractive as a connecting hub for US Airways. The development of the hub-and-spoke system also created competition among connecting hubs. Passengers making a transcontinental trip now had their choice of several airlines and con- necting hubs. A passenger making a trip from Tampa to Los Angeles could connect at Atlanta, Charlotte, Chicago O’Hare, Dallas/Fort Worth, Denver, Phoenix Sky Harbor, Salt Lake City, or Washington Dulles, among others. Passengers could now consider the advantages and disadvan- tages of the connecting airport when making their purchasing decisions. Airports became more focused on the passenger experience as they competed for connecting passengers. In addition to direct competition, there is indirect competition between airports that is more subjective. Local decision makers, politicians, business leaders, media, and other influencers compare their local airport with airports they visit in their travels, especially competing airports. This relative comparison shapes local perceptions of the airport and is a factor in airport plan- ning and management. The ability of airports to respond to or anticipate these comparisons varies due to factors such as airport ownership and the strength of the local market. 2.1.6 Increased Emphasis on Security After September 11, 2001 The attacks of September 11, 2001 (9/11) produced a national security response without prec- edent. Passenger screening at airports, introduced originally in response to a series of hijackings in the 1960s, became the priority. The security screening function was transferred from airlines, which had contracted the service to specialty security companies, to the federal government.

Evolution of Approaches to Customer Service at Airports 11 The increased emphasis on security meant long passenger screening lines and a need for expan- sion of checkpoints in terminals, often displacing other functions, as well as the need for additional airport staff to assist with queue management. The need to screen passenger baggage required instal- lation of large machines, often in terminal ticketing areas because there was no room to accommo- date them in baggage handling areas. In many cases, passengers had to carry their own luggage to the screening machines after check-in. The resulting long security queues, additional baggage handling, and terminal congestion made for an unpleasant and stressful customer experience. On the other hand, the increase in passenger dwell times and inability to bring certain liquids and foods through security screening checkpoints (SSCPs) further increased demand for concessions and services, at least in the post-security areas of terminals. 2.1.7 Pressure to Reduce Costs The airline industry went through a difficult period in the early 1990s. Rising fuel costs, compe- tition from low-cost carriers, economic recession, increased security costs, and reduced demand forced airlines to consider ways of reducing costs. Although airport fees and charges are a small percentage of airline costs compared with fuel, labor, and equipment, it is still an area that air- lines believed could be reduced. Airlines also made investments in technologies and efficiencies that allowed for reduction of personnel costs and staffing levels in terminals. To accommodate the airline concerns, airports focused on ways to reduce their own operating costs, increase non- aeronautical revenue from concessions and services, or both. This brought about an emphasis on expanding non-aeronautical revenue sources and a resul- tant heightened commercial awareness by airport management. Airports looked at other business models and overseas airports, particularly in Europe and Asia, for inspiration on how to expand their non-aeronautical revenues. The more successful of these airports had understood the key link between commercial success and outstanding customer service. Happy customers spent more time and money in the airport, produced more revenue, and opened up opportunities for additional commercial services. 2.2 Customer Experience Management Continuum Worldwide Figure 2-2 presents a conceptual model of the continuum of airport customer experience man- agement. At one end of the continuum are airports that meet the FAA or other relevant regulatory requirements for airports. They tend to focus on important basic functions and local infrastruc- ture necessary for movement of aircraft and passengers. Their primary customers are airlines, and they respond to the essential needs of daily air service, with a focus on operations, maintenance, and facilities. Today, these airports are predominantly in developing countries. On the other end of the spectrum are leading-edge airports that manage the total customer experience. These airports are highly regarded in their communities and are often a source of civic pride. Their management takes a more comprehensive approach, with a focus on all aspects of the operation, including building the airport brand. They collaborate with their business partners and set standards for themselves and others. Customer service is incorporated into all aspects of plan- ning, including airport master plans, capital plans, and the airport’s customer service plan. They are more likely to have a strategic business plan, and that plan incorporates customer experience man- agement throughout. These airports are strategically directed and customer-centric, setting goals based on a vision for the airport rather than taking direction from airlines or external entities. Some examples of non-U.S. airports at this end of the continuum are discussed in Chapter 5, with detailed descriptions of their customer services included in Appendix A. Some U.S. airports at this end of

12 Improving the Airport Customer Experience the continuum are outlined in Chapter 6 and discussed throughout this guidebook. In between are the vast majority of airports that are in various stages of customer-centricity and use some of the same tools as leading-edge airports, but often their approach is neither strategically driven nor interconnected, although it is well intentioned. 2.2.1 Airport Ownership U.S. airport operators are, with very few exceptions, public entities that own and manage the airports. Airports are operated as departments of cities, counties, or states. They are operated as special-purpose authorities with governing boards independent or semi-independent of the airport’s owners, such as those in Orlando, Raleigh-Durham, and Tampa, and by multipurpose port authorities, such as those in Boston, Oakland, New York, and Seattle. Based on the independent ratings of U.S. airports by organizations such as ACI (through the ASQ program) and the Skytrax ratings, high-performing airports can be operated by city departments (Indianapolis/ASQ; San Francisco/Skytrax), by special-purpose airport authorities (Tampa/ASQ), or by multipurpose port authorities (Jacksonville/ASQ). No major U.S. airport is privately owned. However, U.S. airports have a high degree of private-sector participation, with essential functions such as concessions, parking operations, janitorial, systems maintenance, cargo building develop- ment, and perimeter security often (but not always) outsourced to private companies. Development of new terminals and other facilities is heavily outsourced as well, with program managers, architects and engineers, and construction contractors all contracted for, sometimes as design/build teams. 2.2.2 Maslow’s Hierarchy Applied to the Airport Customer Experience Figure 2-3 illustrates the typical airport service delivery chain for arriving and departing pas- sengers. The service delivery chain connects the major functional areas that the typical passenger © Butterfly Consulting. Note: Pax = passengers. Figure 2-2. Airport customer experience management continuum.

Evolution of Approaches to Customer Service at Airports 13 experiences when using an airport as either an outbound, departing passenger or an inbound, arriving passenger. A way of understanding the relative importance of different aspects of the airport service delivery chain throughout the airport experience is to apply Maslow’s Hierarchy of Needs as a conceptual model (see Figure 2-4). Abraham H. Maslow developed a model of human behavior that suggested that human actions are motivated by and oriented toward the achievement of goals. The model is usually presented as a pyramid with five levels, with the most basic physi- ological needs—air, food, and water—at the lowest level and self-fulfillment at the top of the Figure 2-3. Airport service delivery chain. © Butterfly Consulting. Note: FIS = Federal Inspection Services. Figure 2-4. Maslow’s hierarchy applied to airports.

14 Improving the Airport Customer Experience pyramid. The low-level needs are often taken for granted but during emergencies become para- mount. As the lower-level needs are satisfied, the individual is motivated to grow and satisfy higher-order needs. The same is true with the airport experience and the different links in the service delivery chain—airports must focus on getting the basics right before customers are motivated to partake of higher-order services and amenities, let alone speak highly of them. 2.2.3 Getting the Basics Right—Primarily the Physical/Process Aspects of the Airport Experience Air travel can be stressful, frustrating, and time-consuming. Customers may spend a considerable amount of time at the airport, especially in the terminal. Passenger processing and satisfying customer needs, wants, and expectations dominate the passenger’s time. Departing passengers may arrive at the airport several hours before their sched- uled departure times and may spend more time than anticipated in the terminal depending on a variety of factors, including flight delays, cancellations, weather conditions, and peak travel times. Passengers spend much of their time in the terminal going through processing at check-in; baggage drop-off and pickup; security screening checkpoints; immigration and customs; wait- ing (in queues, at the gate, at baggage claim); finding their way (walking considerable distances, transiting between gates or terminals, moving from the entrance of airport to the departure gate and vice versa); satisfying basic needs, wants, and expectations (getting food and beverages to eat at the airport or take on the airplane, using a restroom, refilling water bottles, recharging electrical devices, shopping); and seeking assistance from airport staff. For the departing or connecting passenger, the number-one priority is locating his or her departure gate. Satisfying needs and wants, basic or otherwise, usually occurs after locating the gate, when the passenger has a high enough confidence level that the flight will not be missed and a low enough level of stress to begin to fulfill basic needs and explore shopping and other discretionary options. Figure 2-4 is an adaptation of Maslow’s hierarchy applied to airports, with the most basic physiological airport needs such as cleanliness and washrooms at the base of the pyramid. Cus- tomers demand and expect that basic needs at the airport will be routinely fulfilled. However, basic needs rise to the forefront when not met. ACI has reported that, based on conducting their ASQ survey over many years, all of the top-rated airports have consistently received high customer ratings for these basic services. 2.2.4 ”WOW”—Primarily Emotional Aspects of the Experience Beyond physiological needs, other airport processes and service offerings meet customer needs for safety (security screening, law enforcement, wayfinding, signage), social considerations (friendly and courteous service, concessions offering variety and quality), esteem (priority ser- vices such as lounges and valet parking), and self-actualization (top-rated terminal facilities, land- scaping, gardens, entertainment, art programs, yoga rooms, and other amenities that enhance the experience). A “WOW” customer experience can be described as an experience that surprises or delights the customer. Opportunities to WOW the customer can be found at every level of the Maslow’s hierarchy. WOW experiences at every level: • Exceed the customers’ expectations, and • Leverage the emotional components of each experience.

Evolution of Approaches to Customer Service at Airports 15 The world’s top-rated airports meet the full range of customer needs and do so with a broad and deep range of programs, services, and amenities that often exceed expectations. They also understand that if they are not getting the basics right, efforts expended on services, products, and amenities at the highest level of Maslow’s hierarchy will not reap rewards or benefits commensurate with the efforts and investments made. In fact, they may have a negative and detrimental effect. For example, a meditation garden will not compensate for a dirty terminal and unclean restrooms and may lead passengers to wonder why the money was not spent on maintaining clean facilities instead. The world’s top-rated airports get the basics right and focus on creating WOW experiences by: • Building an airport-wide brand in collaboration with their business partners and stakeholders, starting at the top of the airport company; • Engaging, energizing, and educating airport staff; • Maintaining a positive ambience throughout the airport; • Ensuring uniqueness and sense of place to differentiate the airport from others; • Innovating constantly; • Leveraging technology; • Introducing leading-edge facilities, processes, programs, services, amenities, and product offerings; and • Understanding the importance of how customers feel (e.g., special, valued, assured, cared for, surprised, delighted, entertained) as well as the importance of the airport’s ambience. Figure 2-5 shows an example of how an ordinary restroom can create a WOW experience by getting the basics right first, then focusing on ambience, unique sense of place, constant innova- tion, surprise, delight, people, and creating a fun, enjoyable experience. Highly rated airports understand their customers as well as their customers’ perceptions and what they need, want, and expect from the travel experience. They are leading-edge airports that © Butterfly Consulting. Figure 2-5. Moving from ordinary to WOW.

16 Improving the Airport Customer Experience are breaking new ground focusing on both the tangible and intangible aspects of their custom- ers’ experience (what their customers think and how they feel) across all customer touch points. Their efforts are paying off, figuratively and literally. 2.3 Controlling the Uncontrollable—Improving Airport Customer Experience Through Others The shared nature of service delivery in the airport environment requires the airport operator to take a leadership role in establishing effective partnerships and ensuring the buy-in, commit- ment, and collaboration of the entire airport community to the airport’s brand and customer service standards. Many parties are responsible for the end-to-end delivery of services at an airport, but typically the customers, the stakeholders, the public, and the media hold the airport accountable. Passengers go through various processes as they journey between the curb and their gates and back again. A range of public and private service providers such as airlines, U.S. Customs and Border Protection (CBP), and the TSA provide these processes. Many of these processes, along with the resource allocation decisions supporting them, are not under the control of the airport operator; however, they significantly affect the customer’s overall experience and perception of the airport. In addition, third-party service contractors and concessionaires provide important services, products, and amenities that also affect customer experiences and perceptions, such as providers of custodial services, wheelchair assistance, food, beverages, and retail. Therefore, airport operators must build strong relationships through collaboration and buy-in and, over time, enter into binding agreements (through leases, permits, agreements, contracts, service- level agreements) with business partners, stakeholders, and other service providers in the airport community to: 1. Support the airport’s customer service brand, comply with the airport’s customer service standards, and participate in the airport’s customer service and performance management programs; and 2. Strive to provide pleasing customer experiences on a consistent basis that are aligned with the airport’s customer service brand as the customer moves through the important links in the airport service delivery chain. Key stakeholders and business partners in the airport’s service delivery chain are discussed in the following subsections. 2.3.1 Airline Relationships Airlines in the United States are generally responsible for a number of passenger processes, including: • Check-in, • Baggage drop, • Operation of the transfer desk, • Boarding and deplaning, • Wheelchair assistance, and • Providing customer service agents. Airlines continue to deploy different business strategies to increase efficiency, leverage technol- ogy, increase revenues and market share, and maintain profitability in an increasingly competitive environment. Some airlines are more focused on customer service than others and are often rated

Evolution of Approaches to Customer Service at Airports 17 as better by passengers. Airline strategies may often have an impact on the customer’s airport experience and the customer’s perception of the airport. These strategies include: • Reducing capacity on certain flight schedules and increasing load factors on remaining flights; • Imposing fees for services and amenities such as baggage, snacks, and meals, which influence customer behavior regarding carry-on bags; • Using self-service technology to provide customers with more flexibility and to reduce costs; • Substituting new technologies to expedite and enhance the airline check-in function and boarding process, which may result in fewer personnel being available to assist passengers in the terminal; and • Contracting with third-party contractors such as ground handlers to provide wheelchair assistance, check-in, and gate agents, as well as janitorial companies to clean gate areas or restrooms. Sometimes these contracts do not provide for adequate staffing or adherence to customer service standards. Passengers often believe these services are provided by the airport operator. Today, airport operators are working collaboratively with airlines to put in place win–win strategies that: • Support airlines as they look to successfully deliver on their vision for their customers, and • Obtain airline buy-in and support of the airport’s brand, service standards, and performance management program that will enhance the airport experience for the airline’s passengers. 2.3.2 Federal Agencies • Customs and Border Protection. The international arrival process requires passengers to undergo federal inspection procedures that are often perceived as intimidating and confron- tational for passengers, especially visitors to the United States. This is often due to the authori- tative and rigorous nature of the process and the presence of uniformed government officials who are required to ask questions and identify the passenger’s purpose of travel. The staffing levels of CBP officers have a direct impact on the number of stations that are available to pro- cess passengers and the total number of passengers that can be processed per hour. Inadequate staffing or poor workforce planning at peak travel times can lead to congestion, long queues, and excessive delays for passengers and those who come to meet and greet them. Combined with sterile, unwelcoming Federal Inspection Services (FIS) facilities with poor ambience, this process leads to poor first impressions of the airport, the region, and the country for custom- ers coming to visit the United States or U.S. residents returning home. • Transportation Security Administration. Air travel was irrevocably changed by the events of 9/11. Today, all departing passengers arrive at the airport prepared to undergo the security screening process mandated by federal law and carried out by the TSA. At some airports that have opted-out of using TSA officers to staff their security checkpoints, the TSA oversees the certified third-party security contractor selected by the airport. From the customer’s perspective, the difference in service provider is often not noticed. Similar to CBP procedures, the security checkpoints and TSA officers are sometimes per- ceived as intimidating, inhospitable, and personally intrusive. The facilities at the checkpoint and the accommodations for passengers to collect their belongings and recompose themselves are often perceived as uncomfortable and potentially embarrassing, particularly in older termi- nals that have had to be retrofitted for today’s longer checkpoints. As a result, the security checkpoints and the federal inspection procedures are the points where passengers report the highest level of stress. In response to this, federal agencies have

18 Improving the Airport Customer Experience become more passenger-sensitive and are focusing on providing a safe and secure environment that is more professional and hospitable and less intimidating. Technology is also being leveraged to facilitate these processes and thereby enhance the cus- tomer experience. Introduced technologies include Global Entry, TSA PreCheck, automated passport control (APC) kiosks, and the Mobile Passport app. Airports have also worked in collaboration with the relevant federal agencies to improve the airport’s facilities, furnishings, signage, and the ambience at the checkpoints and in the FIS area. The airports that are best- rated are introducing these enhancements in alignment with their airport brands as well as their airports’ design standards. Some recent improvements in airport security checkpoint enhance- ments are discussed in Chapters 7 and 8. 2.3.3 Local Agencies Airport police, whether provided by local police agencies or by the airport operator, are assigned to perform law enforcement functions at airports and may have a considerable impact on the airport customer experience. They can provide a calming presence in the airport when they elevate the customers’ feelings of being safe and secure. Customers often expect them to serve as customer service ambassadors for the airport; however, some police departments do not see this as their role. In addition, at some airports the police oversee the airport’s traffic officers, who have a significant impact on the customers who drive to the airport to drop off or pick up pas- sengers, as well as on the ground transportation providers. Managing airport curbsides can be a significant challenge and can induce tension on the part of the customers and traffic officers. The curbside is the customers’ first and last impression of the airport for those who are picked up or dropped off at the airport; therefore, airport operators and the police will try to provide a more hospitable and orderly experience that keeps customers safe and delighted by: • Adopting airport protocols and service standards aligned with the airport brand; • Redesigning and re-signing curbsides as well as pickup and drop-off locations in ways that are sensitive to customer needs, perceptions, and expectations while making the curbsides operate more effectively; and • Applying airport rules and enforcing regulations in a uniform and consistent manner. 2.3.4 Other Business Partners and Stakeholders There are myriad companies that do business at the airport and provide products or services to airport customers and affect the customer experience: • Ground transportation companies provide transportation services for people to, from, and around the airport. These companies can be either publicly or privately owned and provide services such as: – Mass transit, including trains, light rail, and buses; – Shuttles and shared rides; – Courtesy vehicles operated by hotels/motels and off-airport parking businesses; – Taxis and limousines; – Rental cars; – Intra-airport transportation such as parking/courtesy shuttle buses, terminal-to-terminal on-airport buses, and people movers; and – Transportation network companies like Uber and Lyft that connect drivers and passengers using smart-phone apps.

Evolution of Approaches to Customer Service at Airports 19 • Service contractors provide important airport services that directly or indirectly affect the airport customers and are either under contract to the airport operator or some other entity doing business at the airport. Contract services may include: – Ground handling companies, which typically provide services required by aircraft while at the gate. Passenger handling services inside the terminal, such as check-in, boarding, and wheelchair and lounge operation may also be provided. – Parking management contractors are typically under contract to the airport operator to manage and operate the parking facilities, primarily by providing parking cashiers, shuttle bus drivers, and supervisors. Depending on the nature of the agreement, parking lot opera- tors may sometimes also be responsible for construction, management, operations, revenue control systems, and maintenance. (In some cases, parking may be self-operated by the airport or operated as a concession.) – Concessionaires are companies that have been granted the privilege to carry out a commer- cial operation at the airport, often with certain minimum operating requirements. In return, the concessionaire pays rent and/or concession fees. Major in-terminal concessions include food and beverage, retail, duty free, and advertising. Concessions have gained a higher profile over the years and have become important contributors to enjoyable customer experiences as well as to the financial and operational success of many well-rated airports.